Following last year's launch of a hedge fund based on Twitter feeds, next year will see the debut of a fund that invests based on news feeds.

Da Vinci Invest will launch the fund on New Year's Day, but it has been running the strategy internally for almost three years. The K Squared Tachyon Fund is thought to be the first hedge fund to use alogrithms to sift through news feeds to systematically find trading opportunities.

"Two and a half years ago, when Need to Know News came out with a computer readable news feed, we immediately implemented it and started trading with our own proprietary capital in February 2009," Hendrik Klein, co-founder of the Swiss firm, told HedgeWeek. "We've not had one down month since that time and this year the strategy is up 78.3% with a maximum drawdown of 0.8%, which is incredible."

The key to the strategy's success, Klein said, is its trading speed. Tachyon trades across six futures markets and its systems develop trades on their own. It averages just 1.5 milliseconds to generate an order, send it, execute it and get a confirmation.

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Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information.